“Ethiopia decided not to pay interest on its debt in Eurobonds as it negotiates with the G20 (Group of Developed and Developing Countries) common framework to restructure its external debt,” the governor of the country's central bank said.
Ethiopia became the latest African country to default on its debt, after Zambia and Ghana, by defaulting on a $33 million coupon (interest) payment on a Eurobond loan.
“Ethiopia is not paying interest on its debt” on $33 million (29.9 million euros) worth of Eurobonds (bonds issued by eurozone countries), said a senior Ethiopian finance ministry official, who spoke on condition of anonymity because he was not authorized to speak. To the media in this regard.
“They are not being paid for a reason, not because of economic problems,” the senior official added.
Ethiopia, Africa's second most populous country of more than 120 million, was due to pay the coupon on December 11, but technically had until this Monday to pay due to a 14-day “grace period” included in the loan. Destiny is worth a billion dollars.
The Governor of the National (Central) Bank of Ethiopia, Mamo Mehretu, also confirmed the failure to fulfill the coupon to the Ethiopian National Television ETV today.
“Ethiopia has decided not to pay interest on its debt in Eurobonds because it is negotiating with the G20 (Group of Developed and Developing Countries) general framework to restructure its external debt, on the principle that all creditors should be treated on a comparable basis”, Mamo explained.
The governor said that as the government is negotiating with the G20 to restructure Ethiopia's total external debt, the Eurobond loan will be treated according to the same principle.
In November 2020, the G20 adopted a common framework for bilateral debt restructuring and other support measures for developing countries whose economies have been affected by the Covid-19 pandemic.
According to the senior official, Ethiopia held talks with Eurobond lenders a fortnight ago and reached an agreement in principle, so negotiations will continue until full agreement is reached.
The source added that Ethiopia has no problem paying interest on the Eurobonds as it has recently received a “green light” from the Chinese government and the Paris Club countries to freeze interest on the $2.2 billion loan.
Ethiopia is experiencing a major financial crisis following the Covid-19 pandemic and a more than two-year civil war in the north of the country. .
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